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spk04: Good day and thank you for signing by. Welcome to the Douglas Dynamics fourth quarter 2021 earnings conference call. At this time, of course, suspense on a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star zero. I would like to hand the conference over to your speaker today, Sarah Lube-Balbert. Please go ahead.
spk05: Thank you. Welcome, everyone, and thank you for joining us on today's call. Before we begin, I'd like to remind you that some of the comments that will be made during this conference call, including answers to your questions, will constitute forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters that we have described in yesterday's press release and in our filings with the SEC. Joining me on the call today is Bob McCormick, our President and Chief Executive Officer. In a moment, Bob will provide an overview of our performance, then I'll review our financial results and guidance. After that, we'll open the call for your questions. With that, I'll hand the call over to Bob.
spk00: Thanks, Sarah. Good morning, everyone. I'll start with a quick review of the quarter. Attachments knocked it out of the park. Strong demand and equally strong execution from our team produced great results. Solutions segments also seen strong demand, but performance continues to be stymied by external headwinds. Despite the difficult and unusual circumstances in 2021, our teams have endured and adapted to the ever-changing conditions. driving incremental continuous improvement initiatives while remaining focused on serving our customers. Looking back over the past two years from the emergence of the pandemic in the US, the first 12 months was health and safety focused, adapting to the unprecedented situation, putting protocols in place, and getting back to work. The second 12 months saw the economic fallout from the first 12 months hit home. all while still dealing with new variants and surges of the ongoing pandemic. As we enter the third year of disruption, we believe the pandemic and the related economic headwinds will start to dissipate, but the exact timing is the big question. The factors impacting performance are similar to the issues faced by many sectors and companies today. Inflationary pressures, supply chain constraints, and labor shortages. Prices for raw materials, components, and products we source continue to rise with inflation at 40-year highs. Those who track and predict chassis supply indicate 2022 will produce a similar number of chassis to 2021, with supply remaining very tight in the first half, then starting to show some improvement in the second half of the year. The Omicron surge also led to an increase in absenteeism in the month of December. That continued in January, but like the rest of the country, the situation has dramatically improved recently. Finding and keeping skilled employees continues to be a challenge, but our team has seen success with initiatives put in place last year and by raising compensation for shop floor associates. The good news is demand trends remain strong across both segments, and with record backlogs, we are primed and ready to execute as macroeconomic headwinds subside. Additionally, we've got a number of new product launches scheduled for the back half of 2022 that will help drive profitable growth in both segments in 2023 and beyond. Let's talk about the segments in more detail. First, attachments. The team produced a strong fourth quarter, which capped off a tremendous year for the segment. Record net sales increased 18%, outperforming Q4 2020, which was a good quarter despite the pandemic disruptions. There were several factors driving these results. Strength in retail activity, dealer and end-user optimism, pricing actions taken during the year, and the continued expansion of our non-struck product offers. Results were even more impressive given the snow season started off very slow in the fourth quarter, with snowfall totals well below the 10-year average. Things improved in January with multiple large storms impacting major metropolitan areas across the Midwest and the East Coast. If these trends continue, by the end of March, we hope to see season totals near average, plus or minus 5%. There is one additional positive factor I will mention now, and you will hear us talk about more later this year, and that's changes in the industry leading to increased demand for non-truck products and ice control equipment. Essentially, we are seeing increased demand for snow and ice control equipment of our non-truck products, namely on UTVs and ATVs. A wide array of end users from traditional landscapers to to maintenance crews on campus environments such as hospitals, universities, and other complexes that need pathways and sidewalks cleared quickly and efficiently in places where foot traffic during snowstorms creates a safety hazard. Historically, these areas were cleared manually. Over the past few years, end users are beginning to migrate towards non-truck equipment, which are more productive and efficient, creating a growth opportunity for Douglas. Keith Hagelin, Mark Van Genderen, and the entire attachments team continue to deliver outstanding financial performance while meeting and exceeding their customers' expectations. Turning to solutions. Supply chain and inflationary headwinds that have been impacting many sectors of the economy continue to disrupt solutions, hindering our ability to upfit work trucks efficiently. For the quarter, net sales declined compared to prior year due to the continued disruption of chassis and component supply. With lower volumes moving through our up-fit business model, profitability was impacted significantly in Q4. However, it's important we keep our skilled workforce intact as we see the backlog we have to address despite the near-term impact on margins. As we look ahead into 2022, the dramatic reduction in Q4 chassis supply, particularly for Class 8 trucks, means more of our planned upfits were pushed out into the first half of 2022. And with inflation at 40-year highs, the cost of completing these upfits will put pressure on near-term margins when these trucks are eventually built and shipped. To help mitigate this risk, we've been renegotiating price with some customers on these delayed shipments. We've had good success on repricing commercial orders at DeJana, but the municipal contracts at Henderson are harder to address. DeJana and Henderson remain strong, and we are continually breaking backlog records, a testament to the strength of our brands, products, and our leadership teams and solutions. As I mentioned earlier, the velocity of trucks moving through our upfit business model significantly impacts profitability. Assuming chassis flow starts to improve in the second half of the year and we begin moving backlog through our upfit facilities, good things will start to happen. The fact is we know we can upfit and deliver great work trucks for our customers at a fair price that is also profitable for Douglas. Just one year ago, Solutions turned in a great fourth quarter before the supply chain disruption began, an important reminder of how they can perform when demand and supply align. Once the headwinds dissipate, we are confident that our diligent execution and improvements made in recent years will drive profitable growth, as predicted, and put us back on track to deliver our long-term financial targets. With that said, I'd like to mention recent actions taken at Henderson regarding our municipal upfit facilities. As you may remember from our January 2021 investor event, we completed a thorough and game-changing upgrade to our Huntley, Illinois, upfit facility. The results were impressive. Utilizing DDMS, we increased efficiency, throughput, and productivity. When chassis supply began to soften in the second half of 2021, our Henderson leadership team made a bold move, deciding to replicate the Huntley process improvements at three other Henderson locations across the country. This was a heavy lift, but the team successfully completed these improvements in Q4. The great news here is that when chassis flow improves and we start to work through our strong backlog, we're positioned to meet customer demand through these four highly productive, efficient upfit facilities, allowing us to close two of our upfit operations, driving fixed costs out of our business model. This is clearly a good example of how we plan to exit this situation in a stronger position than we entered it. With that, I'll turn to our capital allocation priorities. Of course, we remain committed to the dividend and increased it again this year, as we have before in both good times and bad, to 29 cents per quarter. This remains our top priority going forward. Additionally, given our consistently strong free cash flow production, we are initiating a stock repurchase program of $50 million. Looking ahead, we are hoping to see one of the blue chip companies on our target list become available, but aren't seeing many near-term M&A opportunities to pursue today. In the meantime, we continue to build relationships and conduct due diligence on the logical opportunities that come our way. Looking back at 2021, I'm grateful for the drive and dedication demonstrated by our team, who have used creativity and imagination to adapt to the constantly changing circumstances all with an eye on improving our position in operations over the long term, plus showing a willingness to put their heads down and grind it out when necessary. While the series of unpredictable challenges we have faced over the past two years are likely to continue in the near term, we are confident in our long-term potential. I firmly believe when external headwinds turn to our favor, combined with the operational improvements we have implemented in recent years, we will be ready to deliver. driving towards long-term financial goals, which Sarah will discuss later, clearly exiting the pandemic stronger than we entered. Now I'd like to pass the call to Sarah.
spk05: Thanks, Bob. I'll first cover the full-year results, which include these highlights. One, we experienced record sales and attachments and overall double-digit top-line growth. Two, we effectively covered inflationary costs for the full year on a consolidated basis. Three, the demand and solutions remained strong, and our backlog grew to two and a half times over the record level at the end of 2020. Lastly, the strength in our free cash flow continues, and we just announced our 14th increase to our dividend and a board-approved $50 million share repurchase plan. I'll then move to the fourth quarter where we saw headwinds increase, particularly within our solution segment. This will then lay the foundation to talk about next year's guidance. First, the full year. Full year net sales were $541 million, which is a 13% increase compared to last year when we generated $480 million. The improvement was driven by a combination of higher volumes at work truck attachments, and price increases implemented across both segments. Although we experienced direct pandemic-related disruption in 2020, which caused us to suspend operations for part of the first half of last year, in 2021, we unfortunately experienced the resulting supply chain shortages and delays. Growth profit for 2021 was 141.9 million or 26.2% of net sales compared to 128.3 million or 26.7% of net sales in 2020. Although we saw a 50 basis point decline in growth margin in 2021, we're very pleased with our team's mitigation of inconsistent chassis and component supply significant inflationary pressures across all input costs, and inefficiencies due to absenteeism. We strive to offset these headwinds where possible with pricing actions and cost savings initiatives. SG&A costs increased from $64.6 million in 2020 to $78.8 million in 2021. A large portion of the increase relates to non-cash or non-recurring items added back to adjusted EBITDA, which you can see in our net income to adjusted EBITDA reconciliation in our press release. Operationally, the remaining increase primarily relates to higher incentive-based compensation on higher sales and earnings, as well as a return to more normalized discretionary spending in our attachment segments. On a GAAP basis, we recorded full-year net income $30.7 million, or $1.29 per diluted share, compared to a net loss of $86.6 million, or negative $3.81 per diluted share in 2020. The GAAP net loss last year was driven by the $127.9 million goodwill impairment charge taken in the second quarter of 2020. On an adjusted basis, EBITDA was $79.5 million for full year 2021 compared to $74.9 million in 2020. We also generated adjusted net income of $39.4 million or $1.67 in 2021 compared to $27.8 million or $1.18 in 2020. Our improved 2021 results were primarily driven by consistently strong performance from work truck attachments throughout the year. In 2021, interest expense was $11.8 million, which was lower than the $20.2 million last year, following the successful refinancing of credit facilities in the second quarter of 2021. The effective tax rate was 11.3% for 2021 compared to 12.4% in the prior year. Both rates were unusually low, but for different reasons. The 2021 effective tax rate was favorably impacted by the outcome of ongoing state tax audits, and the 2020 effective tax rate was lowered due to the impairment of non-deductible goodwill. Turning to the balance sheet liquidity figures for the full year 2021, net cash provided in operating activities was 60.5 million, higher than the 53.4 million in the prior year. Similarly, free cash flow of 49.3 million compares favorably to the 38.9 million generated during 2020. Our balance sheet is in a great spot with ample liquidity leverage in line with our targets, and our debt refinancing in June locked in lower interest rates. At the end of 2021, total liquidity was $136.1 million, which includes $37 million in cash and $99.1 million in borrowing capacity under our revolver, which is in line with last year's liquidity of $140.1 million. Net debt of $181.9 million compared to $199.1 million at the end of 2020, and our net debt leverage ratio of 2.5 times is within our targeted range. Capital expenditures for 2021 totaled $11.2 million, a decrease of $3.3 million when compared to 2020. With the review of the full year complete, let's look closer at the fourth quarter by segment. Work truck attachments, net sales increased approximately 18% to a record $97.7 million based on strong retail activity and higher prices in response to inflationary pressures. Adjusted EBITDA decreased 8% to $22.2 million compared to the prior year period due to a higher mix of non-trucks, snow and ice control products and a return to normal spending compared to an unusually low level in 2020 due to the pandemic. Results were strong despite the overall lack of snowfall in core markets during the fourth quarter, partly driven by increased demand for non-truck products and ice control equipment. The work truck solution segment recorded revenue of $55.2 million and an adjusted EBITDA loss of $2.3 million. In Q4 last year, the segment's revenue and adjusted EBITDA were $75.2 million and $9.2 million, respectively. Net sales declined compared to the prior year due to the escalated supply chain disruption of chassis and component supply, which impacted volumes and drove labor inefficiency. Inflationary pressures also began to outpace our ability to realize price increases. particularly at Henderson, which negatively impacted profitability during the quarter. As Bob mentioned, we closed two Henderson operations during the quarter for two main reasons. First, a focus on reducing fixed costs where possible, given near-term headwinds, and also to execute on plans to meet Henderson's long-term margin goals. Second, we were able to make these changes without significantly decreasing our long-term upfit capabilities because of the efficiency improvements at the remaining facilities following DDMS projects in recent years. Based on this action, we recorded a non-recurring impairment charge of $1.2 million, and we expect the project to pay back in under two years. Lastly, we're very pleased with our 2021 free cash flow results, which were almost double the dividends of $26.5 million. Over the past two years, we have been able to continue to generate consistently strong free cash flow under even the most difficult operating conditions, which has allowed us to make two changes. First, we were able to increase our dividends for the 14th time since our IPO to 29 cents per share for the first quarter of 2022. Second, the Board approved a $50 million share repurchase authorization, further demonstrating our commitment to deploy excess capital in the years ahead. Next, I'd like to outline our thoughts on guidance and long-term targets. Our 2022 financial outlook anticipates net sales between $570 and $630 million, adjusted EBITDA to range from $70 million to $100 million, and adjusted earnings per share to be in the range of $1.25 per share to $2.15 per share, which estimates an effective tax rate of 25% to 26%. once again not be a typical year for Douglas, let me provide a bit more color on the drivers of the guidance. By far the largest economic headwinds reside in our work truck solution segment. First, the computer chip shortages impacting chassis and component supply continue to plague the entire auto industry, causing delays in the work truck chassis that we need, We're assuming that chassis supply in 2022 will be similar to 2021. Right now, we believe supply will start to slowly improve in the second half of 2022, meaning we will enter 2023 in a much better position than we are today. The silver lining is that the shortages across the entire industry are understood by customers, And more importantly, demand is high and our backlog continues to grow. We ended 2020 with record backlog, then continued to set new backlog records on a quarterly basis during the year. At the end of 2021, backlog was two and a half times higher than a year ago. Second, we saw a steep uptick in input costs in the fourth quarter that will continue into 2022. Our guidance assumes costs to remain at the level we entered the year at, as what we are seeing in relief in some areas is offset by further inflation in others. As a company, we still have an expectation of covering inflation dollar for dollar over the long term, but timing remains an issue, and with the chassis, shortages, price recovery is elongated. I expect solutions price realization to lag inflation throughout 2022, which will negatively impact the segment's earnings and margins. In the near term, we know macroeconomic issues will continue to challenge solutions and expect to see performance begin to improve in the second half of 2022 as work chassis supply starts to increase. We're confident in the margin improvement that will be gained when we realize the velocity of the tremendous backlog of business as these headwinds subside. On the other side of the business, our 2022 guidance highlights the continued strength and resilience of the work truck attachment segment. While they are also navigating through supply chain and workforce constraints, they have consistently been able to meet the continued strong demand for our market-leading products. The great news is we expect that to continue. Our team continues to perform well in all types of economic and weather conditions and will continue to drive the lion's share of our profits in 2022. Strong demand from end users and growth trends in non-truck products is driving slightly better than expected top-line growth. As always, our guidance for the year assumes average snowfall. Looking further out, and as Bob mentioned in our earnings release, we're also reiterating our long-term financial goal of earnings per share greater than $3. We first issued this goal in the fourth quarter of 2019, which was then disrupted by the pandemic mitigation, mostly in 2020, and the subsequent chassis and component shortages, which followed in 2021. We expect these external challenges to start to ease as 22 unfolds. We believe the hard work we've put in to improve our internal operations means we are in a stronger position today, and we can resume our march towards $3 or more of adjusted earnings per share, and we now project to reach that goal in 2025. Reflecting on the last two far from typical years, We've had important wins to celebrate and have learned valuable lessons. While a return to pre-pandemic conditions is taking longer than anyone would have hoped, we are drawing on our get better everyday mindset and continue to focus on the factors within our control that will ensure we exit stronger and that we are optimally positioned for long-term success. And just as important, We remain committed to effective deployment of our capital driven by our strong free cash flow, which will continue to prioritize and grow our return to our shareholders while we also invest prudently in our long-term growth strategies. With that said, we'd like to open the call for questions. Operator?
spk04: As a reminder, to ask a question, you need to press star 1 on your telephone. And to withdraw your question, just press the pound key. Once again, that's star one for questions. Please stand by while we compile the Q&A roster. Our first question will come from Josh Chan from Baird. You may begin.
spk03: Hi, good morning, Bob and Sarah. Thanks for taking my questions.
spk04: Good morning, Josh.
spk03: Good morning. I guess the first question is just a clarification. Sarah, your comment on ramping inflation in Q4. Was that a solutions-only comment, or did that apply for the whole opening?
spk05: It applies for all input costs. I mean, we saw steel kind of peak in September timeframe, which is really the steel that we were using in the fourth quarter. But across the board, I would say that the price increases that we are realizing during the year, we saw a lot of those notices, I guess, coming to us in the fourth quarter.
spk03: Okay, okay. And then, so do you expect to continue to meet inflation on a dollar-to-dollar basis, at least in the attachments business going forward?
spk05: Yes, yes. So let me walk through, I guess, the way I'm thinking on price versus inflation. So I said in the script that 2021, we effectively covered dollar for dollar across all of Douglas. I still expect that to happen for the longer term. But when we look at 2022, Attachments will continue to follow their very diligent pricing process, and they will look at the market pre-season and make changes accordingly. On the solution side, we have implemented multiple surcharges and price increases on their quotes for new business. And there are some areas where we're working to regain some price on longer-term contracts. So that's really what's driving the lag of price versus inflation in the year for solutions, driven by the fact that the chassis are pushed out further and further. So overall, we expect to cover it in the longer term. So to get specifically to your question, yes, attachments will cover perimeter and solutions will lack a bit.
spk03: That's great, Heller. And then I guess circling back to Bob's comments earlier about the non-truck business and attachments, has that phenomenon been occurring gradually or is it more of a sudden shift in how people are addressing that particular need and then Is there a way that you can ballpark how big of that business it might be for you either last year or this year?
spk00: Yeah, it has been growing gradually. And, you know, when you've got the market share that we have on the pickup mounted snow and ice control equipment, especially when you look at our long-term financial targets, we weren't expecting the attachments group to to have a significant amount of top-line growth on an annual basis. But as this phenomenon continues to emerge and grow, it does present a new growth avenue for us, which we're excited about. We've talked about things like the John Deere program that we've done. We've hinted at some of these things over the past couple of years. So it's... It's an exciting new revenue and earnings opportunity growth for us. We've got the right set of products. Our brands matter, and we think all those things are going to result in us driving additional longer-term revenue and earnings growth through the attachments group. I'm not going to speculate on what proportions it are or anything like that. Siri, do you have anything you want to say there?
spk05: No, I'd say in 22, we definitely saw an uptick in non-truck sales. I'm not calculating the percentage offhand, but probably over 20%. And certainly an area of focus that we've had for a long time and expect further growth going forward. Especially when we look out to the long-term... goal of $3 or more for earnings per share, and you think about attachments, a big piece of their growth is continued expansion in this area.
spk03: Great. Thank you for the cover, and best wishes for 2022.
spk00: Thanks, Josh.
spk04: Our next question will come from the line of Mike Liske, DAD. You may begin.
spk02: Yes. Hey, guys. How are we doing? Good, Mike. How are you? Good, Mike. Good. Good. Thank you. I'd like to start with talking about your kind of long-term $3 per share outlook. Can you just remind us, does that assume, is that like an average weather year assumption? Is there any M&A involved there? Is it kind of where you're hoping to be in the two segments over the long term? Just give us a sense as to what the demand level is when you're talking about $3 a share in 2025.
spk05: Yeah, I would say, I mean, whenever we're looking at our guidance or any plans going forward, we're always looking to average snowfall. So certainly we have the growth plans, margin improvement plans to reach the $3 without requiring further snowfall. I would say that the growth plans that we had laid out for attachments and solutions. There's still a lot of opportunity of which you can see in just the growth in our backlog and certainly some of these other areas that we're just talking to now on non-truck and other vertical integration projects.
spk00: Yeah, I would add, Mike, one way to think about it from a very simplistic point of view is you have the attachments group, which is currently performing at or near record levels and has growth ahead of them, and then you're sitting on an unbelievable amount of backlog within the solutions group And we talk about the importance of moving velocity through that fixed cost model. When we get a chance to start eating into that backlog and you have the attachments group going at a faster pace than we had originally anticipated, you put those two things together and that's largely how we get to that $3 target. Also, it's important to know we don't bake acquisitions into any of those projections. We think that's... That's a bad thing to do when you start thinking you have to do a deal for the sake of doing a deal. Douglas will never look at our financial targets that way.
spk02: Got it. Got it. Thank you for that. I also wanted to ask if you could just give us an update as to, and I assume it's not a problem, but just your dealer inventory situation, how's it going, and do you feel like there are folks starving for inventory at this point?
spk00: Yeah, it's interesting. Even though we haven't had a breakout snowfall season for the last couple of years, last January's dealer inventories were at six-year lows, lows we've seen them in a long time. We just took dealer inventory at the end of January this year, and it's up a tick, just a little bit, so still in a very terrific place. Retail activity continues to be strong. It's interesting, while it may snow a little more or a little less in certain parts of the country, we are seeing more ice events. If you think about the last two seasons in terms of ice that is moving farther and farther south within the United States, and so we've got a number of other drivers that are allowing our dealers to sell through their stocking inventory on a pretty regular basis. So we don't have any yellow lights or any red lights on that side of our business at all. Everything is green.
spk02: Okay, great. I just have one additional question. I asked this last quarter, can you just kind of flesh out for us whether you think there's a risk of – these gigantic backlogs of multiples year over year. Could any of them be canceled? Can folks try and back out, or is that not something that you think is a likely occurrence here?
spk00: We have seen none of that to this point. What's interesting is that even while we're sitting on this tremendous backlog, we are still, as we sit here today, order intake is thus far in the first six weeks of 2022 is stronger than it was in the first six weeks of 2021. So this isn't going away anytime soon. The thing that gives us renewed hope for optimism there obviously is that we still know at the end of the day, we get more work trucks than many of our competitors. So even as chassis start to flow again, and people are going to be hungry to get their vehicles, we're going to be first in line, and our lead times are generally better than most of our competitors. So I don't think cancellations are a big risk for us at all. The other thing that I would point out, Mike, is we're not expecting the OEMs, when this chip thing fixes itself, we're not going to get a surge of chassis cancellations in any three- to six-month period. We think we're going to be blowing through this backlog in 2023 and even into 2024, which from our standpoint is perfect because it's going to give us a chance to grow earnings on a pretty consistent basis through those solutions business models.
spk02: Thanks so much, guys. Appreciate it.
spk00: Thank you. Thanks, Mike.
spk04: Our next question is from Mr. McGinnis from Sedota.
spk01: Good morning. Thanks for taking my questions and for all the kind of insights in the release. I think just to start maybe just off of the last question around the backlog and You talked a little bit about a little bit harder on the Henderson side. Has that pushed, given the inflationary environment, has that pushed for the smaller class truck that you introduced relatively recently?
spk00: I want to make sure I understand. Were you asking about whether on the Henderson side the situation really creates any opportunities for some smaller size trucks Municipal vehicles?
spk01: Right, exactly. The newest introduction I think you added around that 2019 conference.
spk00: It does. Here's what's interesting. Municipal budgets are back to being in decent shape, but they are still fixed dollar budgets. So when inflation occurs and prices go up on the work trucks that they need, they still are operating within a fixed budget dollar amount. So a couple things can happen, right? They can take, you know, if they wanted 10 trucks, they can say, you know what, next year I'll take nine. Or to your point, they can say, I'll take nine, but then give me a couple of the medium duty trucks as well. So we certainly expect to see some more of that demand increase on those vehicles. We have yet to see the municipalities play that shell game, if you will. Right now they're still sitting pretty firm on their large trucks, but we expect as they do some shuffling over the next business cycle or two that we will see some mixed shift to those smaller vehicles.
spk01: I appreciate that. But just in relation to the now 25 outlook, is everything else in place other than just really the demand that's coming through? You've done all the other hard lifting you've talked about in terms of the plan efficiencies?
spk00: Exactly. That's what, you know, I mean, you go back. I think that's where our longstanding business model of being part of a weather-driven business situation where you never know what the next year is going to hold. So we are very well practiced and disciplined. And when the hatches are battened down, still finding ways to improve so that when whatever headwind we have turns around, we are exiting stronger. And if you just look at the Henderson dialogue I had today, taking a successful upfit strategy, replicating it across three other facilities, we're going to be nothing but more efficient and more profitable exiting this thing as a result. So it really – I'm excited to see what happens when these headwinds subside. I will tell you, you know, whereas – We're as impatient as anybody on this point, right? I mean, this is all taking longer than any of us would have hoped. The headwinds are out of our control, but we feel very well positioned that when these things dissipate, it's going to be fun to watch what happens at Douglas Dynamics.
spk01: Great. I appreciate that. And then just two quick ones. Just on the non-truck attachment side, can you just talk about maybe the growth rate you're seeing there? I know you've talked about this for a number of years, but it sounds like it's garnering a larger percentage now.
spk05: Yeah, I was just mentioning on the prior question, I don't have the exact percentage in front of me, but well over 20-25% this year from a growth perspective. and projected to continue to grow. It's been a real focus area for the attachments group.
spk00: And we also, I indicated in my script that you'll be hearing more on this topic from us as the year progresses. And we want to take the opportunity as we get a little deeper into the calendar year to highlight More specifically, some of those product offerings and what the impact looks like longer term. It should be very exciting.
spk01: Great. And then just one last one around M&A. You know, it sounds like there's some opportunities out there. What's the biggest hurdle at this point in completing a transaction in the environment?
spk00: Well, I would say two things. The first one is something that's on our target list becoming available. You know, as you know, we have a very disciplined, thoughtful list of targets out there. And so, obviously, number one, that needs to happen first. But as important as that, obviously, valuations, right? It's still a very robust multiple environment out there. And if and when one of our targets comes up, we're going to have to play to those market conditions and we'll have to see where we land. But it is entirely possible that we may find ourselves in an environment where a desired property is up for bid and we're going to have to determine if we can stretch and make the numbers still work. Again, we don't need M&A to get to the targets that Sarah's laid out.
spk01: I appreciate that. Thanks for taking my questions, and good luck in Q1.
spk00: Thank you.
spk05: Thanks, Chris.
spk04: And once again, that's star 1 for questions, star 1. One moment for questions. And I'm not showing any further questions in the queue. I'd like to turn the call back over to Bob McCormick, CEO, for any closing remarks.
spk00: Thanks. Thank you for your time today. I'd like to leave you with a couple thoughts. While pulling away from the economic impact of this pandemic is taking longer than any of us would like, we want you to know that three things remain true. Number one, We at Douglas Dynamics will do everything within our control to improve and won't lose focus on the long-term profit drivers within our business while we manage through these short-term headwinds. Number two, the fundamentals of our business haven't changed, and we are well-positioned for long-term success. And number three, our team at Douglas Dynamics is driven to achieve our goals and to ensure that we meet long-term expectations. Thank you all for your time, and we look forward to seeing you in person at some point during the year. Have a terrific day.
spk04: This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.
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